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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Thermo Fisher Scientific Inc was -1.12. The lowest was -2.85. And the median was -2.48.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Thermo Fisher Scientific Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.1121||+||0.528 * 0.9982||+||0.404 * 0.9893||+||0.892 * 1.0771||+||0.115 * 1.0064|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0016||+||4.679 * -0.0246||-||0.327 * 1.1564|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $3,049 Mil.|
Revenue was 4953.2 + 4490.9 + 4535.2 + 4294.8 = $18,274 Mil.
Gross Profit was 2278.8 + 2053.9 + 2078.5 + 1957.9 = $8,369 Mil.
Total Current Assets was $7,021 Mil.
Total Assets was $45,908 Mil.
Property, Plant and Equipment(Net PPE) was $2,578 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,758 Mil.
Selling, General & Admin. Expense(SGA) was $4,976 Mil.
Total Current Liabilities was $4,866 Mil.
Long-Term Debt was $15,372 Mil.
Net Income was 629.5 + 473.5 + 516.6 + 402.2 = $2,022 Mil.
Non Operating Income was 16.6 + -10.3 + -10.9 + 0.5 = $-4 Mil.
Cash Flow from Operations was 1205.9 + 771.8 + 889.5 + 289.1 = $3,156 Mil.
|Accounts Receivable was $2,545 Mil.
Revenue was 4652.5 + 4123.2 + 4270.9 + 3918.8 = $16,965 Mil.
Gross Profit was 2108.3 + 1883.3 + 1941.8 + 1822.5 = $7,756 Mil.
Total Current Assets was $5,741 Mil.
Total Assets was $40,834 Mil.
Property, Plant and Equipment(Net PPE) was $2,449 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,688 Mil.
Selling, General & Admin. Expense(SGA) was $4,612 Mil.
Total Current Liabilities was $4,146 Mil.
Long-Term Debt was $11,420 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(3048.5 / 18274.1)||/||(2544.9 / 16965.4)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(7755.9 / 16965.4)||/||(8369.1 / 18274.1)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (7021 + 2577.8) / 45907.5)||/||(1 - (5741.2 + 2448.8) / 40834.3)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(1688.2 / (1688.2 + 2448.8))||/||(1758 / (1758 + 2577.8))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(4975.9 / 18274.1)||/||(4612.1 / 16965.4)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((15372.4 + 4865.8) / 45907.5)||/||((11420.2 + 4146.3) / 40834.3)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(2021.8 - -4.1||-||3156.3)||/||45907.5|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Thermo Fisher Scientific Inc has a M-score of -2.48 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Thermo Fisher Scientific Inc Annual Data
Thermo Fisher Scientific Inc Quarterly Data